The Government of Uttar Pradesh on July 05, 2024, issued a notification regarding the Clarification on the time limit under Section 16(4) of the UPGST Act, 2017 in respect of RCM supplies received from unregistered persons.
Key Points of the Notification
- Input Tax Credit Availment: A registered person can avail ITC on the basis of an invoice issued in accordance with clause (f) of sub-section (3) of section 31 of the UPGST Act, provided the tax has been paid. Clause (f) of sub-section (3) of section 31 typically relates to invoices issued for supplies made by an unregistered person under the Reverse Charge Mechanism (RCM).
- Issuance of Invoice by the Recipient: A registered person liable to pay tax under sub-section (3) or (4) of section 9 must issue an invoice for goods or services received from an unregistered supplier on the date of receipt. The recipient, being liable to pay tax on RCM basis, must issue an invoice and pay the tax in cash.
- Time Limit Calculation for ITC: For supplies received from unregistered suppliers where the recipient pays tax under RCM and issues the invoice, the relevant financial year for calculating the time limit for ITC availment under section 16(4) of the UPGST Act is the year in which the invoice is issued by the recipient.
- This is subject to the recipient paying the tax and fulfilling other conditions and restrictions under sections 16 and 17 of the UPGST Act.
- If the recipient issues the invoice after the time of supply and pays tax accordingly, interest on the delayed tax payment is applicable. Delayed issuance of the invoice may also result in penal action under Section 122 of the UPGST Act.
Implications for Registered Persons
- Timely Issuance and Payment: Registered persons must issue invoices and pay tax promptly on supplies received from unregistered suppliers to avoid interest and penalties.
- Compliance with Conditions: Ensure all conditions and restrictions under sections 16 and 17 of the UPGST Act are met to avail ITC.
- Record Keeping: Maintain accurate records of all invoices issued and taxes paid to ensure compliance and facilitate ITC claims.
